FSB: Five Gold Things to Boost Scotland's Newest Firms in 2013

Reference number: SPU2412

Scotland's newest businesses and army of self-employed individuals can boost Scotland's economy in 2013 if the issues which stall small business development are tackled, argues the Federation of Small Businesses (FSB).

In his Christmas message, the FSB's Andy Willox highlights the huge potential of Scottish small enterprises. His comments come as Scottish Government figures show that the number of self-employed individuals rose from 213,050 in 2011 to 239,080 in 2012 and that the number of VAT-registered small employers also rose, from 91,610 to 96,390, over the same period.

And, the 20,000-strong small business body argues, with action in five key areas, these fledgling businesses can grow and develop, creating more jobs, generating more revenues and trading Scotland back to growth.

The FSB's "five gold things" for 2013 are:

1. Help to get hiring

Taking on your first member of staff is an, often daunting, milestone for any business. Expanding the workforce in businesses with a handful of staff can change the character of that business and dramatically increase their capacity. 2012 research from the FSB showed that Scotland''s smallest businesses could take on more staff with better tailored support. In 2013, therefore, the FSB would like to see resources diverted from existing Scottish employment schemes towards projects better tailored to the business needs of the smallest employers.

2. Swap the spare room for the high street

Moving from the spare room or garage to your first premises is another key stage in a business's development. The Scottish Government took the first step to help get businesses into premises by introducing the landmark small business rates relief and the new Fresh Start rate discount scheme will encourage more businesses to bring empty shops or offices back into use. When the Scottish Government's Town Centre Review Group reports in 2013, we must see a renewed focus on getting as broad a range of businesses trading in our towns as possible.

3. Action on overheads – fuel, finance and utilities

73% of Scottish FSB members said that the cost of running their business rose during the last quarter of 2012 – with fuel and energy bills disproportionally hitting businesses north of the border. (FSB Voice of Small Business Index Q4 – see notes.)

While the Chancellor's decision to cancel the proposed fuel duty increase in January is welcome, more needs to be done in 2013 to give firms some certainty over costs. The FSB will also be calling on Ofgem to end the energy companies' practice of automatic contract rollovers, which sees small businesses locked into long-term contracts they often can't afford.

The FSB is also looking forward to seeing more details of the state-backed small business bank early in the New Year. This new institution must be firmly focussed on providing flexible, affordable finance to the wider small business community.

4. Get smart about regulation

The Scottish Government's Better Regulation Bill, set to be unveiled in 2013, is a real opportunity for Scotland to become a model of proportionality and consistency when it comes to regulation.

On the other hand, Real Time Information, one of the biggest changes to the payroll system in the last 60 years, is due to come into force in April. Lots more work needs to be done to ensure that small businesses aren't hit hard by this change.

5. The confidence to invest

A loss of confidence led to capital investment intentions falling in the third quarter of 2012 and, although rallying towards the end of the year, latest figures show that investment intentions remain lower than in the UK as a whole. (FSB Voice of Small Business Index Q3 & Q4 – see note.)

Increasing the Annual Investment Allowance from £25,000 a year to £250,000 in the 2012 Autumn Statement will allow businesses to write off much more investment against tax and could boost capital spending in 2013. As investment spending is often a key driver of economic recovery, the FSB urges the largest firms sitting on the largest reserves of cash to boost confidence by investing for the recovery.

Andy Willox, the FSB's Scottish policy convenor, said:

"Small-to-medium sized businesses already employ 1.09 million people in Scotland – over half of all private sector employment. However, there's little doubt our economy still needs more jobs, more opportunities and more growth.

"We know that the success or failure of a particular business is down to much more than the actions of government. But the FSB believes that we can make it easier for the smallest businesses to overcome the key hurdles in their development. That means making it more cost effective and less risky to do better business.

"We can make the transition to becoming an employer or the move into premises cheaper. We can certainly make it less daunting. An extra employee or new premises can really change the character of a very small business. It builds capacity, frees people up to do what they''re good at and secure more business. That boosts productivity, which boosts revenues, jobs and confidence – which sparks another round of growth. If we dedicate our efforts in 2013 to helping businesses through these key stages, there is certainly a big prize to be won."

ENDS

Notes to editor

The FSB is the UK's leading business organisation with around 200,000 members UK-wide, 20,000 of whom are in Scotland. It exists to protect and promote the interests of Real-Life Entrepreneurs who run their own business. More information is available at www.fsb.org.uk/scotland

The figures on overheads at point 3 come from the FSB's Voice of Small Business Index Q4 report. It asked: What has been the overall change in the cost of running your business over the past three months, compared with the same period last year?

UK

Scotland

Significantly increased (>5%)

25%

27%

Slightly increased (1% - 5%)

46%

46%

Approximately the same (+/- 1%)

23%

21%

Slightly decreased (1% - 5%)

3%

3%

Significantly decreased (>5%)

2%

2%

Don''t know/not applicable

1%

2%

The same survey also asked: Which three of the following do you perceive to be the greatest barriers to achieving growth?

UK

Scotland

General economic conditions in the UK

64%

56%

Consumer demand

34%

40%

Fuel costs

26%

41%

Access to finance

22%

20%

Tax burden

20%

19%

Labour costs

18%

18%

Regulatory burden

18%

17%

General economic conditions abroad

14%

8%

Utility costs

14%

20%

Input or raw material costs

14%

14%

Cost of finance

12%

7%

Rent/premises costs

10%

11%

Other

4%

4%

None of these

2%

1%

The details and methodology of the FSB's Quarter 4 confidence index report can be found in the full report by clicking Q4 VOSB Index

The figures in point 5 on capital investment intentions come from the FSB's Voice of Small Business Index Q3 and Q4 reports. In Q4, a net balance (a simple balance: negative responses subtracted from positive responses) of +5.8% of Scottish small firms anticipated capital spending rising over the coming twelve months. This follows a worrying drop in Q3, when the net balance was -4.8%. However, expected Scottish capital investment growth in 2013 remains below the UK-wide figure of 12.5%.